US crude output to reach 7.5 million barrels a day by 2019

U.S. oil production will increase to 7.5 million barrels a day in 2019 from 5.7 million in 2011 on rising output from onshore shale formations, the Energy Department said.

Domestic crude output will then decline gradually to 6.1 million barrels a day in 2040 as producers develop “sweet spots” first and then move to less productive areas, the department said Wednesday in the early release of the annual Energy Outlook 2013 report.

“The growth results largely from a significant increase in onshore crude oil production, particularly from shale and other tight formations,” the department said.

Onshore production from tight oil formations, or shale oil with low permeability, will account for 51 percent of total output in the lower 48 states, up from 33 percent in 2011.

As a result of rising domestic oil output, imported liquid fuels as a share of total consumption will drop to 34 percent by 2019 from 45 percent in 2011 and rise to 37 percent by 2040, the department said.

The increasing production of oil, gas and renewable fuels will reduce the share of net imports in total U.S. energy consumption to 9 percent by 2040 from 19 percent in 2011.

Brent Shift

The Energy Department shifted to Brent oil as the reference price in this year’s report. Brent spot prices will average $117.36 a barrel in 2025, $145.41 in 2035 and $162.68 in 2040 in 2011 dollars. West Texas Intermediate spot prices are expected to average $115.36 in 2025, $143.41 in 2035 and $160.68 in 2040.

“With a growing discrepancy between West Texas Intermediate prices and global crude prices, it was important for the EIA to use a global marker,” said Adam Sieminski, administrator of the department’s Energy Information Administration, in a webcast following the report.

Natural gas production will also increase as output from shale formation rises. Total output will reach 33.2 trillion cubic feet in 2040 versus 23.1 billion in 2011.

The U.S. will become a net exporter of liquefied natural gas starting in 2016 and will be a net exporter of natural gas by 2020, two years earlier than last year’s forecast.

The natural gas share of electric power generation will increase to 30 percent in 2040 from 24 percent in 2010, and renewable fuels will account for 16 percent, up from 13 percent in 2011. Natural gas prices at the Henry Hub in Louisiana will average $4.87 per million British thermal units in 2025, $6.32 in 2035 and $7.83 in 2040.

Total U.S. primary energy consumption will grow to 107.6 quadrillion British thermal units in 2040 from 97.7 quadrillion in 2011. The fossil fuel share of energy consumption falls to 78 percent in 2040 from 82 percent in 2011.

The report is based on the assumption that current laws and regulations remain unchanged. The agency uses the report to analyze market trends and potential changes in energy policy.